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2 ABOUT THE FPDI PROJECT The Clean Energy Council is the peak body for the clean energy industry in Australia. We represent and work with hundreds of leading businesses operating in solar, wind, energy effi ciency, hydro, bioenergy, energy storage, geothermal and marine along with more than 4000 solar installers. The Clean Energy Council is committed to accelerating the transformation of Australia s energy system to one that is smarter and cleaner. This guide was produced as part of the Future Proofi ng in Australia s Electricity Distribution Industry (FPDI) project, a collaborative project involving the Clean Energy Council and its members, the Australian Renewable Energy Agency (ARENA), and other key stakeholders. This project aims to enhance the fl exibility and resilience of Australia s electricity distribution systems for the future. With the objective of enhancing the fl exibility and resilience of Australia s electricity distribution systems and the installations connected to them, the FPDI project will analyse existing and emerging issues. Ultimately the project seeks to build the foundations to facilitate the effective and effi cient integration of renewable energy systems for Australia s electricity distribution industry. A subsequent goal is to ensure that the benefi ts of the transformation of this key industry toward a renewable energy future are accessible by the sector s various stakeholders. The project s detailed scope of work includes technical, economic and regulatory analysis, forums, knowledge gathering and dissemination of the project outcomes. This approach is intended to create the environment for well-rounded stakeholder engagement throughout the project that will reinforce project outputs and target specifi c benefi cial outcomes from each aspect of the project. Further details of the project, its scope, governance and objectives can be found at cleanenergycouncil.org.au/fpdi ACKNOWLEDGEMENTS This report was produced with funding support from ARENA. ARENA was established by the Australian Government as an independent agency on 1 July 2012 to make renewable energy technologies more affordable and increase the amount of renewable energy used in Australia. ARENA invests in renewable energy projects, supports research and development activities, boosts job creation and industry development, and increases knowledge about renewable energy. The Clean Energy Council thanks Entura and the Moreland Energy Foundation Limited for their efforts in preparing this report. The Clean Energy Council also thanks the FPDI project Steering Committee for their time and effort in providing crucial guidance and review of this work. These stakeholders include ARENA, Alternative Technology Association, Australian Energy Regulator, CSIRO, Department of Industry, Energex, Energy Networks Association, Energy Retailers Association of Australia, Marchment Hill Consulting, Pacifi c Hydro Pty Ltd, AusNet Services and University of Technology Sydney. Guide to improving electricity use in your business

3 MESSAGE FROM THE CLEAN ENERGY COUNCIL KANE THORNTON Chief Executive Australia s electricity supply is in a state of transition. For small to medium-sized businesses, this transition brings risks, but also opportunities to lower operating costs, get an edge on your competition and differentiate your business by using new technologies. Using technologies like solar PV, battery storage, load shifting and integrated energy management systems can be a sensible step to reduce your electricity bills. However, one of the biggest challenges when it comes to reducing your energy use or your bills is fi nding clear and easy to understand information on what the opportunities are, and what might work for your business. The objective of this guide is to help SME business owners to understand the options for managing their electricity consumption. This guide is a how-to reference designed to help you better understand how you use electricity, and from there investigate the types of demand-side management options that will help you reduce your operating costs. The Clean Energy Council hopes this guide will help the SME sector to discover the many opportunities available when it comes to saving electricity (and money). At the same time, by providing the information businesses need to make an informed decision, we hope this guide will help protect companies from the risks associated with the transition in our electricity supply. Australia s energy system looks very different to what it did 20, 50 or 100 years ago and we re certain it will look very different again in the future. We want to see SMEs embrace that change, and be at the forefront of adopting new technologies that will hold Australia in good stead to embrace a lower-carbon future and maintain our impressive economic position. Guide to improving electricity use in your business

6 DEMAND-SIDE MANAGEMENT SOLUTIONS AND YOUR BUSINESS With electricity prices on the rise, energy bills are becoming a more important consideration for small to medium-sized enterprises (SMEs). Improving the way your business uses energy with some simple solutions can be an easy way to help reduce operating costs. DEMAND-SIDE MANAGEMENT (DSM) SOLUTIONS CAN HELP YOU MANAGE YOUR ENERGY COSTS. Some examples of DSM solutions are: energy effi ciency on-site renewable energy (embedded generation) energy storage (for e.g. batteries) load shifting (which allows you to move your energy consumption to a cheaper time of day) Energy (kwh) ENERGY EFFICIENCY AND SOLAR LOAD SHIFTING LOAD SHIFTING AND BATTERIES am 6am 12pm 6pm 2 Guide to improving electricity use in your business

7 WHAT ARE DEMAND-SIDE MANAGEMENT SOLUTIONS? Demand-side management (DSM) solutions are available to energy customers to reduce their energy use, produce their own energy on-site, store their own energy for later use or shift their electricity consumption to different times of day. Each solution has its own fi nancial and environmental benefi ts. Which solution is right for your business is dependent on your consumption (what you use energy for and what time of day you use it), what type of electricity tariff you re on and other factors such as your business premises. WHY ARE DEMAND-SIDE ENERGY SOLUTIONS IMPORTANT? The electricity network is built with enough capacity to supply a maximum output of electricity (peak electricity demand). This is generally at its height in the early evening and is particularly high on hot evenings in summer when a lot of air-conditioning is being used by businesses and households. DSM solutions can help reduce peak electricity demand by smoothing out electricity consumption, or moving or reducing consumption in peak times. At a community level this can help reduce the fi xed component of electricity bills and at an SME level this can deliver signifi cantly lower operational costs through smarter on-site use of electricity. Reducing this peak network electricity demand means that further investment in the electricity network may be avoided. PURPOSE OF THIS GUIDE The purpose of this guide is to equip your business with helpful information to manage your electricity use better, including how to understand your electricity tariff and your daily electricity consumption profi le. The guide will also step you through the characteristics of DSM solutions and how they might be of benefi t to your business. This will help you to identify and implement the DSM solutions that are right for your business. Guide to improving electricity use in your business 3

8 DEMAND-SIDE MANAGEMENT SOLUTIONS A QUICK REFERENCE GUIDE OFFSET COSTS WITH SOLAR PV ENERGY EFFICIENCY Energy effi ciency is about reducing the amount of overall energy required to operate your business. This can include upgrading to more energy effi cient machinery, appliances or fi ttings, improving your business premises (for e.g. through insulation) or changing behaviour such as turning off lights or adjusting the thermostat on your air-conditioner. EMBEDDED GENERATION Embedded generation refers to on-site generation of electricity behind the meter to be used by the business itself. This can include any small electricity generator but at the SME level the main embedded generation is solar PV. Embedded generation does not so much reduce the energy you use as offset it, meaning your energy costs are lower. There is also the potential to export electricity you don t use to the electricity grid for use by others. INSTALL INSULATION UPDATE EQUIPMENT GUIDE TO IMPROVING ELECTRICITY USE IN YOUR BUSINESS 1 UNDERSTAND YOUR ENERGY USE The right type of demand-side management solutions for your business will depend on what you use energy for and what time of the day you use it. 2RESEARCH DEMAND-SIDE 3THE MANAGEMENT OPTIONS Choosing which demand-side management solutions match your business starts with knowing a bit more about the available options. WEIGH UP OPTIONS Some solutions are simpler to implement than others and some have stronger returns on investment it pays to understand these factors. 4 Guide to improving electricity use in your business

9 PRE-COOL BUILDING MAKE THE MOST OF OFF-PEAK LOAD SHIFTING Load shifting refers to solutions that allow a reduction in electricity demand at peak times when electricity is expensive to a time when electricity is cheaper. This includes turning off or scheduling non-critical appliances (for e.g. washing machines and dishwashers) out of peak times, or pre-cooling your business premises earlier in the day so that airconditioners don t need to run at as much in the late afternoon or early evening. Load shifting measures can also be soft, for example text notifi cations to turn off appliances for short periods of time. ADJUST THERMOSTAT o C STORE FOR LATER ENERGY STORAGE Energy storage for SMEs largely refers to batteries or battery energy storage systems. What this means is that electricity from the grid or generated on-site (solar or wind) can be stored and used either as backup or when electricity from the grid is more expensive UNDERSTAND YOUR ELECTRICITY TARIFF Understanding your electricity tariff will make a big impact on which demand-side management solutions you can take advantage of. SEEK HELP You can t do it all on your own. Once you are armed with a little bit of knowledge, you re ready to dig deeper or get some help from others. DOES THE BUSINESS CASE STACK UP? In order to ensure a solution makes sense for your business the return on investment has to be right. OVERCOME 7BARRIERS There are sometimes a few non-fi nancial hurdles to overcome before you re able to implement a solution it pays to be aware of these. Guide to improving electricity use in your business 5

10 UNDERSTAND YOUR ENERGY USE EVERY BUSINESS IS DIFFERENT AND YOURS IS NO EXCEPTION. The extent to which particular demand-side management (DSM) solutions will suit your business depends primarily on: Your daily electricity consumption profi le What types of energy-using equipment, appliances and fi ttings you have in your business What electricity tariff you re on Although there is some variation in the way different businesses use energy, there are similarities within individual business types. 1 6 Guide to improving electricity use in your business

11 Guide to improving electricity use in your business 7

12 DAILY ELECTRICITY CONSUMPTION PROFILES EXPLAINED A daily electricity consumption profile captures the amount of electricity consumed by an SME at different times of day. You might have previously noted your daily usage of electricity on a bill measured in kilowatt hours (kwh). Your daily electricity consumption profile goes a level deeper and shows you at what times of day you use the electricity. The shape of the daily electricity consumption profi le is important and differs dependent on your business type. Think of it like the ebbs and fl ows of your business if you re a café there are certain peak periods of activity around lunch time. In the example below of an offi ce, there is relatively low usage overnight (electronic equipment such as servers) with the bulk of electricity usage during offi ce hours. The small peak at 1pm (where the offi ce is using approximately four times as much electricity compared to overnight) shows additional lunch time activity in the offi ce kitchen. Whether you have a daytime bias (peak in the middle of the day) such as this SME or an evening bias such as a take-away food business or hotel will dictate what DSM solutions will work for you. In particular, technologies such as solar are more effective for SMEs with a daytime bias. Energy (kwh) INDICATIVE DAILY ELECTRICITY CONSUMPTION PROFILE - OFFICE LOW USE OVERNIGHT LUNCHTIME PEAK USUAL DAYTIME ACTIVITY PLUS KITCHEN USE LOW USE OVERNIGHT am 6am 12pm 6pm 8 Guide to improving electricity use in your business

13 RETAIL ACCOMMODATION If you run a retail business, you re most likely to consume the most energy during the day when your shop is open. This means that if opening hours are mostly during the day, the daily electricity consumption profi le is often a very good match for solar PV. Retail businesses use energy in different ways but the majority of energy use is through heating and cooling (HVAC) and lighting. This means retail is a good fi t for energy effi ciency that focuses on these end uses. Given the importance of customer comfort, energy effi ciency solutions will need to ensure that this is maintained. If you run an accommodation business it s likely you ll have a strong evening bias to your daily electricity consumption profi le. This is because accommodation rooms and other on-site amenities are often used more during the evening. Businesses that operate late into the night may be able to access cheaper energy outside peak times compared to other business types. Accommodation businesses use a lot of energy in heating and cooling the indoor environment to keep guests comfortable. Lighting is also a reasonably large component of energy use. Energy effi ciency improvements should focus on these energy uses, for example improvements to the building itself like draught proofi ng and insulation and upgrades to heating and cooling appliances can provide good savings. RETAIL Indicative daily electricity consumption profile and typical energy use breakdown. EQUIPMENT OTHER HVAC ACCOMMODATION Indicative daily electricity consumption profile and typical energy use breakdown. EQUIPMENT OTHER HVAC ENERGY (kwh) LIGHTING ENERGY (kwh) LIGHTING 12am 6am 12pm 6pm 12am 6am 12pm 6pm Guide to improving electricity use in your business 9

14 HOSPITALITY WHOLESALE /WAREHOUSE If you run a hospitality business you will likely require specialised equipment for making, cooking and storing food and beverages. Whether you run a café, fast food business or a restaurant/bar can make a signifi cant difference to when you use most of their energy. The key indicator is what service periods your business caters for (i.e. breakfast, lunch or dinner). Cafés, for example, have an electricity consumption profi le well matched to solar, but restaurants open in the evening may not. Hospitality equipment is often specialised and designed for function, not energy effi ciency. The easy wins tend to be in heating and cooling, hot water and refrigeration. For example non-perishable drinks fridges can be put on a timer to save energy overnight. If you run a wholesale or warehouse business, when you operate depends on the types of goods you house. You might start earlier than other businesses in order to provide same day delivery service. Warehouses are normally based in poorly insulated large spaces with high ceilings, making heating and cooling ineffective and costly. The daily electricity consumption profi le is normally steady across the day with peaks when lighting and machinery is in operation. Retrofi tting LED or other energy effi cient lighting is normally a good option for these businesses as is installing skylights to make the most of natural light. Many warehouses or wholesalers deal mostly in refrigerated goods, which require energy throughout the day. This type of appliance can be a good energy effi ciency opportunity. Depending on the proportion of energy consumption during the day, a warehouse/wholesale business may be well matched to solar. HOSPITALITY Indicative daily electricity consumption profile and typical energy use breakdown. HOT WATER OTHER REFRIGERATION HVAC WHOLESALE /WAREHOUSE Indicative daily electricity consumption profile and typical energy use breakdown. OTHER HVAC EQUIPMENT ENERGY (kwh) EQUIPMENT LIGHTING ENERGY (kwh) LIGHTING 12am 6am 12pm 6pm 12am 6am 12pm 6pm 10 Guide to improving electricity use in your business

15 OFFICE MANUFACTURING If you run an offi ce, your energy use during the day will depend on hours and staffi ng levels. You also face the challenge of regulating the temperature in the offi ce to suit people with different thermal comfort expectations this can be tricky. The daily electricity consumption profi le is the opposite to an average house, with most energy used during the day but only limited amounts at night. This is a good match for solar PV. Heating and cooling use the most energy in offi ces, with lighting the next biggest user. Increased use of offi ce machinery (such as servers) in recent times has increased offi ce energy use while also increasing cooling requirements. Energy effi ciency improvements to lighting and heating, ventilation and cooling (HVAC) systems can be teamed with improvements to the building shell such as shading or insulation to reduce energy use and provide fi nancial savings. If you run a manufacturing business, your energy use depends on what you manufacture there is no typical electricity profi le. In most manufacturing businesses the machinery used to produce the product is the largest energy user in the business with lighting, cooling and offi ce equipment also contributing to the overall energy use. Time of operation also varies with the type of production, with many SMEs (for e.g. food) operating overnight or starting early to cater for customer needs. Many manufacturing businesses do not heat the premises as the manufacturing process provides heat as a by-product. In all manufacturing businesses the key is to maximise the effi ciency of machinery, but also work on secondary energy uses (such as refrigeration) to provide savings, allowing you to keep electricity use low during downtimes. Utilising solar is an option for most manufacturing businesses and the type of premises often makes for good roof access. OFFICE Indicative daily electricity consumption profile and typical energy use breakdown. EQUIPMENT OTHER HVAC MANUFACTURING OTHER Indicative daily electricity HVAC consumption profile and typical energy use breakdown. REFRIGERATION LIGHTING ENERGY (kwh) LIGHTING ENERGY (kwh) HOT WATER EQUIPMENT 12am 6am 12pm 6pm 12am 6am 12pm 6pm Guide to improving electricity use in your business 11

16 LARGER BUSINESSES IF YOUR BUSINESS IS A LARGE CONSUMER OF ENERGY THERE ARE CERTAIN ADDITIONAL FACTORS THAT SHOULD BE TAKEN INTO ACCOUNT WHEN MANAGING YOUR ENERGY USE. FINANCIAL PAYBACK The fi nancial return on DSM solutions depends on a number of factors including your tariff and your daily electricity profi le. Larger businesses generally pay less per unit for electricity, meaning that the initial investment may take a bit longer to provide a return. AVAILABLE ELECTRICITY TARIFFS The types of electricity tariffs available to your business increase with your electricity consumption and how much your peak electricity demand is. Larger customers tend to have more choice than smaller customers in the type of tariff available. NEGOTIATE OWN ELECTRICITY CONTRACT All businesses are able to enter into a negotiated contract rather than use a standard market contract, but it makes better sense for larger electricity consumers. Negotiated contracts need to be explicitly entered into by the electricity customer. When using a negotiated contract a wide range of options are considered, with the terms usually determined according to the specifi c characteristics of the customer s requirements. If you are thinking that your business would benefi t from a negotiated contract, you should get in touch with your electricity retailer directly. NETWORK SUPPORT AGREEMENTS Larger customers make a greater impact on the network than smaller customers and at times of network peak demand this is especially important as electricity at this time is very expensive. This can also impact the stability of the grid with the potential for blackouts or brownouts to occur. As a result there is an interest for retailers in being able to curb consumption at times of network peak demand to reduce costs and to the electricity distributors in maintaining supply. In some cases, a network support agreement might be able to be negotiated between large electricity users and the relevant network business. This type of agreement provides fi nancial compensation to businesses that reduce their consumption at time of peak energy use. Cogeneration plant COGENERATION AND TRIGENERATION Cogeneration and trigeneration are proven technologies which generate electricity and thermal energy (heating) from a single fuel source (usually natural gas). For buildings with a high thermal energy or cooling load such as hospitals or gyms with pools this technology may be worth considering, keeping in mind the future increases in gas prices and a technically complicated connection process. POWER FACTOR CORRECTION Some larger commercial electricity customers may be charged for apparent power (kva) rather than real, or true, power (kw). If your business is being charged for apparent power then it could be in your interest to take steps to reduce your power factor. If you have a low power factor using a power factor correction (PFC) device could decrease your electricity costs by improving your power factor. 12 Guide to improving electricity use in your business

17 RESEARCH DEMAND-SIDE MANAGEMENT OPTIONS THIS SECTION OUTLINES THE VARIOUS DEMAND- SIDE MANAGEMENT (DSM) OPTIONS AVAILABLE TO YOUR BUSINESSES IN MORE DETAIL. 2 Image courtesy Thunder Road Brewing Company Guide to improving electricity use in your business 13

18 ENERGY EFFICIENCY Energy effi ciency acts to reduce the amount of energy required for your business to operate. Energy effi ciency involves either installing equipment such as building insulation, more effi cient fi ttings and appliances or changing behaviours. Energy effi ciency is an overall reduction in the amount of electricity used, but does not usually focus on a reduction at a particular time of day. Energy effi ciency also has signifi cant environmental benefi ts. For energy effi ciency the value is in the electricity not consumed. Some electricity tariffs may make the value of this energy greater or less. Importantly, the options for energy effi ciency within your business relate to how you use energy (refer to business types) and the best value options depend on what you can do without affecting your business operations. Although not the focus of this guide, behavioural change can also be a simple and cost effective solution to reduce the volume and timing of consumption to achieve the desired DSM outcomes. A number of organisations can assist with training for staff on more effi cient use of energy. IMPACT OF ENERGY EFFICIENCY ON CONSUMPTION EXAMPLES OF ENERGY EFFICIENCY TECHNOLOGIES: Efficient lighting Technologies such as LED lighting or lighting control ensure light is effi cient and only provided when necessary such as times when building is occupied. Heating Ventilation Air Conditioning (HVAC) Insulation and building design Installation or retrofi t of more effi cient HVAC units Changes to thermostats to allow for a greater range of internal temperatures Energy efficient appliances Upgrading or expansion of appliances from domestic appliances through to process equipment to reduce the amount of energy used Energy consumption Energy consumption with energy efficiency ENERGY (kwh) Halogen replacement with LED 12am 6am 12pm 6pm 14 Guide to improving electricity use in your business

19 EMBEDDED GENERATION Centralised generation such as coal-fi red power stations have historically dominated electricity generation in Australia. The alternative is on-site (or embedded) generation of electricity to be used behind the meter, such as by your business itself. This offsets the energy you consume and in most circumstances allows you to export surplus energy back to the grid. The rate at which businesses get paid, or the feed-in tariff, for the exported electricity varies between states. Embedded generation reduces the amount of energy you pay for, but not how much energy you actually use. Most embedded generation is renewable and therefore has a signifi cant environmental benefi t. TYPICAL SME PROFILE WITH SOLAR IMPACT Energy consumption ENERGY (kwh) Solar generation Net consumption SOLAR PHOTOVOLTAIC (PV) GENERATION Solar photovoltaic (PV) generation is the most common type of embedded generation in Australia. Solar PV is suitable for both urban and rural environments and a range of sizes can be cost effectively installed for an SME. North-facing roof space is the preferred orientation, however viable systems can be designed for east and west-facing roofs. Depending on your hours of operation this may actually improve the fi nancial return on investment as time-of-use tariffs (explained later) may mean that your electricity is more expensive in the late afternoon/evening when a west-facing solar installation is still producing. In general the sizing of the PV system should be matched against the demand for energy, minimising the export of energy, due to the low feed-in tariff received in most regions of Australia. For further information on installing solar PV refer to the Clean Energy Council s Guide to installing solar PV for business and industry solaraccreditation.com.au/solarforbusiness SMALL WIND TURBINE GENERATORS Small wind turbine generators convert wind energy into electrical energy. Wind turbine projects at a smaller scale can suffer from high planning and installation costs and are often uncompetitive with solar PV. But in a rural setting with a good wind resource, their viability improves considerably meaning they may match solar PV for fi nancial return. OTHER OPTIONS A number of other embedded generation opportunities are available for SMEs, such as fuel cells and cogeneration, but these are generally viable only in quite specifi c circumstances and often contribute to fossil fuel pollution. Cogeneration in particular may be suited to SMEs with high heating loads (accommodation with swimming pools or large industrial processes). 12am 6am 12pm 6pm Guide to improving electricity use in your business 15

20 ENERGY STORAGE LOAD SHIFTING Energy storage can take a variety of forms, but battery storage is the most practical option for SMEs. Battery arrays have a long history of being used in off-grid applications to make more use of power generated by solar PV. Recently businesses have started to investigate their potential for on-grid situations. When combined with solar, they can be used to move electricity from a period with excess generation to one without. Historically, because of their high cost, SMEs that have grid connections have only used battery storage to back up critical systems (such as computer servers) for short periods of time. To be used daily a much larger amount of storage is required. If used on a daily basis, batteries will generally have shorter lifespans and the replacement costs impact the fi nancial return of these solutions. Although costs for battery systems are declining rapidly it is important to consider the operational lifespan of any battery options that you investigate to make sure your expected payback is realistic. Additionally, strict recycling and disposal practices are required to avoid environmental impacts. TYPICAL SME PROFILE WITH SOLAR AND STORAGE IMPACT Load shifting refers to moving an electricity load from one period of time to another. It differs from other strategies such as energy effi ciency because the total amount of energy being consumed doesn t change. Load shifting is generally done to: Move energy consumption from a high cost tariff period to a low one (such as moving from peak to off-peak) Reduce consumption in a period of network peak demand (expensive energy) by spreading out the consumption over a longer period At its simplest, load shifting is using the timer on your appliances (for e.g. dishwashers and washing machines) to run during low cost tariff periods in the early morning, or changing your work schedule. At the more complex end, it includes having Demand Response Enabling Devices (DREDs) installed on equipment such as air-conditioning, refrigeration systems, pumps and PV systems. This allows the equipment to be turned off (with your permission) for short periods of time by an energy supplier. A good time to consider this is when this type of equipment is being upgraded. For load shifting to be of benefi t, you need to have tariffs which reward reductions at certain time of day load shifting will have no effect if you are on a flat rate. Also, load shifting will not be practical if you do not have substantial electricity loads that can be shifted, or if those electricity loads already operate at off-peak times. TYPICAL SME PROFILE WITH LOAD SHIFTING Energy consumption Solar generation Battery charge Net consumption solar and battery Energy consumption Load shifting ENERGY (kwh) ENERGY (kwh) 12am 6am 12pm 6pm 12am 6am 12pm 6pm 16 Guide to improving electricity use in your business

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June 28, 1999 ANALYSIS OF THE ADMINISTRATION S PROPOSED TAX INCENTIVES FOR ENERGY EFFICIENCY AND THE ENVIRONMENT INTRODUCTION A few months ago in the FY 2000 budget the President proposed a $3.6 billion